VAT_Split_Payments_V0.2

Requirements Specification
ST_IT_AR_06
VAT SPLIT PAYMENTS
ST_IT_AR_07
VAT SPLIT PAYMENTS REPORTING
Version 0.1
[16 Aug 2018]
Requestor Details
Name: Tina Atkinson
Contact Number: +44 7469 155706
Email: tatkinson@agility.com
Document Versioning
Version Description Date
0.1 First Working Draft 16-Aug-18
Requirement
ST_IT_AR_06 and ST_IT_AR_07 – VAT Split Payments
Module: AR
Requirement Type: Statutory
Business Priority: Critical
Requirement Complexity: High
Global / Regional / Local: Local
Anticipated Solution: RICEW - Interface
Detailed Requirement
ST_IT_AR_06 – VAT Split Payments
ST_IT_AP_07 – VAT Split Payments Reporting
Split Payments - Overview
Due to a recent change in the VAT regulations in Italy, there is a new requirement to identify a
specific list of clients that are listed on the Italian stock market in order to apply VAT differently from
the other Italian clients. This is currently around 50 clients but the requirement is expected to be
extended to more Customers in the future.
When a client is listed on the Italian stock market, the VAT needs to be calculated differently from
the standard VAT application. This is referred to as ‘split payments’.
Although the VAT is included in the Sales Invoice to the Customer, when a client is subject to ‘split
Payment’ invoicing type, the only amount being recovered from the Client is the goods amount.
Although the VAT must appear on the invoices, it will not be paid to Agility by the client. Instead of
paying VAT to Agility, the client will pay it directly to the government.
Current Solution
There is currently a temporary workaround in place where CONTROL IT is manually maintaining a

table of Client IDs that have been identified as split payment Customers with an identifier of “ITX”.
Workaround creates client VAT group, there is an override in place at the client account level that
changes it from ITV to ITX. ITX Customers default to a specific zero rated VAT code. Sys21 then
creates the VAT lines because the VAT lines for split payment clients are still required to be included
in the VAT Registers & VAT summary report. The Sales Invoice is then reformatted in DMS to add
the 22% VAT so that it shows on the invoice to the Customer. This is temporary only while Italy is
on Sys21 which is not sustainable due to manual maintenance requirements in CONTROL IT and also
because it is not acceptable for the VAT to be calculated by the document management system
instead of the operational billing or financial system as there is a risk the calculations could be
different. Therefore a proper solution now needs to be established for when Italy goes onto Oracle.
Requirement Overview
The requirement is to:
1) Identify the Customers that are subject to the split payment rules at a Customer Account
Level.
2) Have Customers with the ‘split payment’ flag default to a specific VAT Group that will be set
up with the split payment rules.
3) Set the default VAT code to calculate VAT at 22% for CONTROL to generate VAT at 22%.
4) Show the VAT on the CONTROL Sales Invoice to the Customer at the rate of 22%.
5) Have a different number sequence for split payment customers – One Normal Sales Invoice
number range and one Prior period Sales Invoice number range (for the two/three days at
the beginning of the month)
6) Reverse the VAT records that are produced by CONTROL so the VAT does not appear in the
accounting system.
7) Include split payment Client VAT amounts in VAT Registers in Oracle.
CONTROL Development Details
WW Client Accounts
The current “Zero VAT Agreement” field will be changed to allow a new value of “2” to be entered
for “Split Payment”. This value will only be valid if the user is signed into the CONTROL LIT
environment. If set to “2” then the Client VAT Group will default to “ITX” overriding the standard
Client VAT Group default logic. Validation will ensure the “VAT Exempt No./Date.” and “Our
Ref./Effect.Date” are left blank where the Accounts has been flagged as “Split Payment”.
Note: The Client VAT Group of “ITX” will be stored on “WW Companies” as detailed in section .
Entering this value in “WW Companies” will enable the entry of “2” in the current “Zero VAT
Agreement” field on Client Accounts. This document assumes only Company LIT will enable this
functionality.
Note: A background process “ACCBCH” also runs on CONTROL and automatically re-defaults the
client VAT Group on Client Accounts based upon updates to Client data changes made globally. This
process will be modified in line with the change to “WW Client Accounts” to ensure Client Accounts
flagged as “Split Payment” will default the Client VAT Group to “ITX”.
The changes within this section will cover the requirements for points i, ii, iii and iv. VAT Code and
VAT Code defaulting rules will need to be changed by the business at an appropriate time.
Invoice Numbering
In order to implement a new Invoice / Credit Note Number Range for “Split Payment” Clients
processing will be added to the Invoice / Credit Note creation process to allow “Split Tax”
Transactions to be identified using the “2” value entered in the “Zero VAT / Split” field on the
Account.
Current set-up for CONTROL Company “LIT” uses Number Ranges “INVNUMBER” and “LITPRIOR”.
Since the “INVNUMBER” Range is used by a number of CONTROL Companies this will need to be
changed to use a LIT specific range. This new Range and that for “LITPRIOR” will be configured to
have two number sequence, one for Transactions against “Split” Clients and the other for “non-
Split”.
Note: The use of a different Invoice Number Range will be configurable based upon a new Yes / No
flag held on “WW Companies” as detailed in section .
WW Companies
Fields will be added to the third screen of this function as shown below to allow entry of the “Client
VAT Group” to be used when the “Zero VAT / Split” field on “WW Client Accounts” is set to “2” and a
Yes / No flag to allow the use of a different Invoice Number Range where.
Override Client VAT Group: Optional entry. If entered must be a valid Client VAT Group.
F4 List to Search Select Client VAT Groups.
Use VAT Group Range: Will default to No and will only allow a value of Yes to be
specified if the Override Client VAT Group has been entered.
On the Oracle side of the interface, Oracle will calculate a 2 nd negative VAT line automatically for
these specific split payment VAT codes to offset the positive VAT line. The PFSUM doesn’t pick up
VAT so it would still be possible to reconcile CONTROL to Oracle. The ‘Agility Reconcile Report’ can
exclude the negative lines for reconciliation purposes. The negative line would be in a separate
reverse VAT ledger and the positive line would be in the normal VAT register. We can have separate
VAT register for split payment Customers with reverse VAT. We just need to ensure that the same
invoice can be captured in two different VAT ledgers.
Open Issues/Action Items
No Issue Description Owner Date Req'd

01 3rd Level of VAT Nicoletta believes a 3rd level of split is going to NB 14-Sep
Split come into effect so we need to understand
and consider this in the requirement
specification
02 How will Oracle We need to confirm what is required to be NB/ 14-Sep
handle split completed on the Oracle side to MS/MA
payments based accommodate the above interface change
on CONTROL to from CONTROL.
Oracle Interface
development
03 VAT Registers We need to define how Split Payments will be NB/ 14-Sep
No Issue Description Owner Date Req'd
handled in the VAT Registers MS/
MA/TA
04 Trade vs Non Is non trade applicable and how will it be NB/ 14-Sep
Trade handled? MS/
MA/TA
05 VAT Registers How will Oracle recognise the Clients and NB/ 14-Sep
create a different transaction type, number MS/
sequence and VAT register. MA/TA
05 Accounting Nicoletta to define and document the NB/ 14-Sep
Entries accounting entries. MS/
MA/TA
06 Oracle Offset Tax Investigate if oracle offset tax standard NB/ 14-Sep
functionality can be used if linked to CONTROL MS/
to improve current process of manually raising MA/TA
a JL to zero out the VAT
07 Reporting Need to define reporting requirements (VAT NB/ 14-Sep

Requirements reporting etc.) MS/
MA/TA
08 CONTROL To Need to define reconciliation requirements NB/ 14-Sep
Oracle and process MS/
Reconciliation MA/TA
Detailed Solution
Create a Sale Invoice or review the invoices imported from control system.
1. Navigate to Transactions > Transactions
2. Select the required source, Class, Type and invoice date.
3. Select the transaction type should be as IVA Vendite as these are related to Split
Payment.
4. Select the customer name for whom the invoice is being raised.
5. Click on Line items and enter the description, Quantity, Unit Price and Amount.
6. Select one of the tax codes (B, D &E) related to Split Payments & save.
7. Click on Tax lines and see the split payment lines created.
8. Close the window and run the below report.

Note: Please make sure that EMEA Vat Selection process is run before running the
report as it is prerequisite for all Italian reports.
 Italian Sales VAT Register Report
9. Upon completion, click on view output and see the report.
Sample Output:
Attachments
Approval
Name:
Date:

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Requirements Specification

Split Payments - Overview

There is currently a temporary workaround in place where CONTROL IT is manually maintaining a

The requirement is to:

7) Include split payment Client VAT amounts in VAT Registers in Oracle.

CONTROL Development Details

Open Issues/Action Items

No Issue Description Owner Date Req'd

07 Reporting Need to define reporting requirements (VAT NB/ 14-Sep

8. Close the window and run the below report.

 Italian Sales VAT Register Report

9. Upon completion, click on view output and see the report.

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